$2.7 billion might be biggest Medicaid cut in nation, lawmakers told

Thursday

SPRINGFIELD -- Illinois may be trying to cut more from its Medicaid program in a shorter period of time than any other state, Illinois senators were told Thursday.

SPRINGFIELD -- Illinois may be trying to cut more from its Medicaid program in a shorter period of time than any other state, Illinois senators were told Thursday.

Joy Johnson Wilson, health policy director for the National Conference of State Legislatures, said other states have made significant cuts in their Medicaid programs, but have done it over two years rather than one.

Gov. Pat Quinn said in his budget proposal that he wants to reduce Medicaid spending by $2.7 billion next year. A working group of state lawmakers is meeting to find ways to make the cuts. Options include beefing up determination of eligibility so that people who don’t qualify are removed, eliminating or paring back services that aren’t required by federal regulations and reducing rates paid to doctors and hospitals that treat Medicaid patients.

Johnson was asked to address a rare committee-of-the-whole session of the Senate to brief senators on the issues they will face as they try to make reductions. One of those is the size of the cuts Quinn wants this year. Federal regulations limit the types of changes that can be made to Medicaid programs.

“All the restrictions under current law have to be met,” she said. “That’s why it is so difficult to get large savings in a current year. Most states have to get savings over a span of years. Your challenge is you don’t have that time. You really need to get substantial savings in the current year. That’s very hard to do.”

Wilson’s presentation was sobering news to senators.

‘Big trouble’

“We’re in trouble, big trouble,” said Sen. Donne Trotter, D-Chicago. “There’s a tremendous amount of work to be done with a goal that might be too high to attain this year.”

Trotter said lawmakers must weigh the damage spending reductions will do to people who need medical care. Moreover, he said, not all cuts end up saving the money expected. Wilson mentioned that when Arizona reduced funding for dental care – an optional service – one result was that more people went to the hospital with severe dental problems.

“The administration just presented (the cuts),” Trotter said. “It is up to us provide the funds or not.”

Sen. Matt Murphy, R-Palatine, said the size of Illinois’ problem may force the state to seek a federal waiver.

“We need to do drastic things and do them now,” he said. “We can have some Medicaid program or no Medicaid program, but we can’t have the one we have now.”

The Quinn administration issued a statement acknowledging that finding $2.7 billion in savings in a single year will be difficult.

“But we’ve gotten to the point where, despite the difficulty, we must try to make the program sustainable in order to keep providing other government services that are just as essential,” the statement said.

No easy options

Wilson cautioned that some of the money-saving solutions carry their own problems. While Illinois and other states want to move Medicaid recipients into managed-care programs, such programs can be difficult to establish in rural areas that may be medically underserved.

Reducing reimbursement rates can drive medical providers out of the system, she said.

Many states are focusing on cutting optional services that are not required under federal regulations, and Wilson said Illinois has more optional programs than many other states. But optional services include things like prescription drugs, which are considered part of basic private health coverage.

“Optional services are not like options on a car,” Wilson said. “There’s probably no one here that would argue that prescription drugs are not essential to health care anymore.”

Doug Finke can be reached at (217) 788-1527.

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